Buying an investment property to rent out is a big deal. You’ve taken on debt with the intention of eventually turning a profit. In the meantime, you’ve got to spend time and money handling situations that can be frustrating.
Being a landlord is challenging enough, but when you’re a new landlord, that challenge is tenfold. You don’t yet have the wisdom that comes from experience. So, here’s how to handle the following challenges like a pro:
Unexpected repairs are especially inconvenient when the situation is an emergency. For instance, if there’s a hole in the roof or a plumbing leak, you can’t put off the repair. You’ve got to drop what you’re doing, check it out, and call a professional. You could call a professional immediately, but unless it’s a severe emergency, it’s best to assess the damage yourself. Tenants sometimes downplay situations when it’s the result of their negligence.
Emergency repairs are not just inconvenient; they’re expensive. It’s important to maintain a reserve of funds in a separate account to use in emergency situations. Don’t allow yourself to be caught off guard with unexpectedly high service charges.
Emergency repair calls also challenge your work schedule and personal life. It’s frustrating to get a call at 3 am from a frantic tenant. In a perfect world, emergency repairs would only be needed during the day. Unfortunately, they often occur when you’re trying to get a good night’s sleep.
Unless you enjoy fielding calls at all hours in the night, hiring a property management company is the solution. A property management company eliminates your need to participate in the process – they’ll field the calls, call in for repairs, and work with the repair person or company.
As a landlord, you have the right to use a tenant’s deposit to pay for damages beyond normal wear and tear. You also have the right to sue a tenant who doesn’t pay for damages they’ve caused. However, there’s no guarantee you’ll see the money. Even if you win a judgment against them in court, they could choose not to pay up.
When a tenant doesn’t pay according to their judgment, it will be an additional expense to pursue payment. If that tenant doesn’t have any money, you’re out of luck. You might be able to get an order to garnish their wages, but unless the damage is enormous, it might not be worth pursuing.
The other side is that a tenant might sue you for not returning their full security deposit, even if you did so legally. Always handle your security deposits professionally, meticulously, and according to the law.
Preventing serious damage begins with choosing renters carefully. It’s impossible to know everything about a person at first glance, but a thorough screening process can help. Background and credit checks are a crucial part of the screening process. If you’re tempted to disregard credit, think twice. While some people with bad credit pay their rent on time, many don’t. By running credit checks, you can choose a qualified tenant according to your credit requirements.
Another consideration to make is whether your security deposit is adequate enough to cover significant damage. Instead of using a low security deposit to entice a renter, consider requiring the maximum amount allowed by Texas law (within reason).
Some tenants love to complain. The more tenants you have, the more complaints you’ll need to field. Although most complaints will be valid concerns, you’ll get a mix of questionable complaints, too.
To avoid getting stressed out, create a plan and have it in place as soon as possible. List the most common complaints tenants have in general, and how you’ll handle each one. Know who you’ll call and what you’ll say to keep things safe and legal. When receiving a complaint, keep Houston’s Fair Housing laws in mind. If the complaint has anything to do with the habitability of the unit, it should be a priority.
Create a documented escalation process as well. For example, handle the situation with a phone call first. If that’s not enough, request a meeting with the tenant and have them fill out a formal complaint. Requiring this process will filter out the nitpickers and chronic complainers.
Above all, always handle complaints immediately. A tenant will lose trust in you if you wait, or don’t handle the situation professionally.
No landlord wants tenants who constantly call the police. When there’s a legitimate reason to call the cops, it’s perfectly acceptable. The problem arises when a tenant calls them excessively for seemingly no reason.
The constant presence of police makes neighbors feel uncomfortable. They don’t know what’s going on. They won’t know if you’ve got a criminal living in your unit or not.
You can’t tell your tenants not to call the police, but you can advise them to limit their calls to matters of urgency. For example, say you’re managing an apartment building and a tenant has a problem with another tenant, but nobody’s in danger and no laws are being broken. Make it clear they should talk to you first.
Ultimately, better tenant screening will prevent this situation from happening.
Everyone has been late with the rent at least once. Life happens, and being late a few times is understandable. However, if chasing down payments is a regular occurrence for you, it’s time to change the way you handle payments. Maybe you’ve tried all the standard tricks like threatening eviction and late fees, but have you considered taking a rewards-based approach?
If your current efforts aren’t working to generate on-time payments, consider lowering the rent (slightly). Tell your tenant if they pay on time for the whole year, you’ll lower next year’s rent by $50/month. It will cost you a total of $600, and it might train your tenant into paying on time. You don’t have to continue the deal beyond one year.
Another idea is to set tenants up with automatic rent deduction. If they resist, offer them a 5-10% discount for allowing you to automatically collect the rent.
For tenants concerned with their credit, start reporting monthly payment history to the three main agencies: Experian, TransUnion, and Equifax. Reporting monthly rent payments gives tenants an incentive to pay on time and helps them establish credit when they do.
If being a landlord in Houston has become inconvenient or frustrating, contact us to find out how we can help. Hiring a reputable property management company will ensure your investment property remains a source of passive income.
At Green Residential, we’ve got more than 30 years’ experience screening tenants, collecting rent, and handling maintenance and repairs. Our team knows how to get and keep happy tenants. Contact us for more information.
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